Estonian parlt passes bill enabling use of Russia's frozen assets

TALLINN - The Estonian parliament passed a bill on Wednesday that enables the use of the assets of persons in Russia that are frozen under international sanctions to compensate Ukraine for war damages.

Sixty-five members of the Riigikogu voted in favor of passing the bill and three were against it.

The Act on Amendments to the International Sanctions Act and Amendments to Other Associated Acts, initiated by the government, will create a national mechanism to ensure the financial liability of an aggressor state for the damage caused by the most serious violations of international law. The amendment will enable the use of assets of individuals and companies that have contributed to Russia's wrongful acts, which have been frozen under sanctions, as an advance payment for damages owed by Russia to Ukraine.

Before the second reading, the constitutional committee had incorporated into the act an amendment according to which the Foreign Ministry will decide on the use of the assets as an advance payment for compensation for damage in the course of administrative procedure. According to the initial wording, it would have been necessary to apply for authorization from administrative court to use the assets.

According to the act, a decision on the use of assets as an advance payment for compensation for damage can be made where damage has been caused by a wrongful act and the damage has been proved and must be compensated for under international law, and the foreign state that has sustained damage has submitted a relevant claim to the foreign state that has caused the damage, and the state that has caused the damage has not met the claim within a reasonable period of time. In order to launch proceedings on the use of assets in Estonia, a relevant request will have to be submitted to Estonia and the conditions for the use of the assets as an advance payment for compensation for damage and for assigning the right of claim to the owner of the assets will have to be agreed upon with the state that has submitted the request. In addition, the link between the owner of the assets and the wrongful act must be sufficiently proven.

The amendment provides that the Foreign Ministry will have to determine all the facts and ownership relations relating to the assets and make sure that there are no exceptional circumstances that would make the individual's interests outweigh the need to apply the measure. According to the act, the owner of the assets will have the right to contest the decision on the use of the assets in administrative court.

The amendment to the act also clarifies the competences of state agencies in the implementation of international sanctions and gives them clearer legal bases for the implementation of sanctions and for supervision.

Chairman of the constitutional committee of the Riigikogu Hendrik Johannes Terras said that the creation of a legal regulation for using the frozen assets was a complicated challenge that several allied countries and international organizations were working on, and Estonia had a pioneering role in it.

"Russia is an aggressor state, and the burden of compensating the war damage caused by it cannot be left to Ukraine and its allies. Russia is responsible for causing the damages and must bear that responsibility," he pointed out.

Terras noted that the assets that have already been frozen under international sanctions and which in any case cannot be used or disposed of by their owners can be used to compensate for the damage caused by the war of aggression in Ukraine.

"With the act that was passed today, Estonia is proposing a mechanism that provides for the liability of the people and companies directly involved in or contributing to the aggression," he said, adding that the constitutional committee had been discussing the creation of such a regulation in great detail with various parties, including foreign experts, for more than six months.